Auto Industry and Insurance: Where is Tesla driving them to?

Tesla Technology has hastened the progress of the auto industry in terms of innovation. It urged and accelerated the automotive industry’s shift from gasoline and hybrid engine to electric and autonomous driving by spearheading the revolution. Tesla is not just changing the auto industry; it is forcing it to change rapidly.

How exactly is Tesla changing the auto industry for good?

With its introduction of the Autopilot, other auto companies, especially the luxury ones, have come up with features that resemble the autopilot feature. Since its first appearance, major automotive companies such as General Motors and Mercedes-Benz have announced that they will be rolling out semi-autonomous and highly-automated systems. Hands-free or driverless is definitely the direction that cars are heading, with experts looking at 2020 to be the year when autonomous and semi-autonomous cars will be regulars on the road.

Tesla pioneered, popularized, and promoted electric vehicles, and it pushed its rivals to adopt electrification quickly. In fact, General Motors even went ahead of Tesla in releasing its electronic vehicle, the Chevy Bolt, to the mass market. Experts say that in 2040, 54% of cars in the world will be electric. Volvo said that it will stop selling gas-only vehicles in 2019, while the environmental minister of France said that they will ban vehicles that use fossil fuel by 2040.

When it comes to software, Tesla is clearly ahead of the game. With its ability to update the software of its cars over the air, meaning via a server based on cloud, Tesla can potentially drive the rest of the auto industry to be obsolete if the other companies do not catch up soon enough. This ability revolutionizes the customer experience with its convenience, and brings revenue gains and cost savings to manufacturers, so it is the direction that all automotive companies would want to take.

How about insurance?

Driverless cars, means no person behind the wheel; so how does this change the auto insurance landscape?

There is a consensus that automotive companies will assume the liability if a car accident occurs without the involvement of a human driver. Among companies that have already assumed liability for self-driving vehicle crashes are Google, Volvo, and Mercedes-Benz. Tesla even went a step ahead and extended an insurance program for buyers of Tesla vehicles. This shows how confident they are in the technology.

Insurance premiums may go lower due to a decline in accidents. Although there are hiccups in the development stage of self-driving cars, experts predict that autonomous cars will eliminate human error, which causes the majority of accidents on the road. Experts also predict that at a certain point, perhaps in the 2040s, consumers might even start to stop getting personal accident insurance as roads become safer.

Take note that these are predictions, not taking into account the direction of the auto industry is taking in the next few years. The insurance industry has plenty of time to pivot and adjust itself into the innovative narrative of the automotive industry. Moreover, there are still aspects of the autonomous car business where insurance definitely remains relevant, such as product liability, cybersecurity, and infrastructure insurance.